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Business Management

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Autor:  anton  27 April 2011
Tags:  Business,  Management
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Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING CORPORATION

Problem Solution: Riordan Manufacturing Corporation

MBA/530- Human Capital Development

May 10, 2006

University of Phoenix

Problem Solution: Riordan Manufacturing

“Employee motivation is an issue that does not discriminate. Organizations of all sixes wrestle with it, and those who don’t are at a disadvantage, faced with lower job satisfaction and increased turnover (University of Phoenix, 2006).” This is exactly the situation that Riordan Manufacturing is facing. Michael Riordan, CEO, is aware that a drastic change is needed, either to “completely overhaul the reward system, use piecemeal solutions to address the most critical issue, or find a new motivation strategy (University of Phoenix, 2006).” Beginning, by paraphrasing the situation background, a description of key issues and opportunities facing Riordan can be identified. The perspectives of stakeholder’s needs as well as the values and rights that have lead to ethical dilemmas in the company will be identified. Thus, a definition of the problem statement can be developed that allows for multiple solutions, and future focused on meeting the end-state goals of Riordan. Let’s begin by explaining the situation that is occurring with Riordan Manufacturing

Situation Background

Riordan Manufacturing is a global plastics producer that earns over 46 million annually and employees over 500 people. A fortune 1000 enterprise, Riordan receives a reported 1 billion dollars in revenue. Due to declining sales and profits over the past two years, the company has decided to implement “several strategic changes in the way it markets and manufactures and markets its products (University of Phoenix, 2006).” Michael Riordan, CEO of Riordan, has decided to start by revamping its sales process and adopting a customer-relationship management system. “The achievements of an organization are the results of the combined effort of each individual (University of Phoenix, 2006).” The CRM would mean that focus teams, consisting of sales person, product engineer specialist, and customer service representatives would service customer’s not single salespersons.

In the manufacturing department, “Riordan implemented a Six Sigma quality approach (University of Phoenix, 2006).” This approach redirected work to other facilities as well as restructured work teams. However, these new changes have caused a decline in employee retention. According to Dreher and Dougherty, “Individuals will be influenced by the task demands and reward system from the organization and assigned job.” Employee surveys also revealed a decrease in job satisfaction, compensation, and benefits. The current reward system is not solely based on performance, but recognizes cost-of-living increase, seniority and position. Thus, prompting managers to request that a new rewards system be created. “ Job performance will likely be most effective when the person’s temperament, preferences and expectations are congruent with the organizations reward system (Dreher & Dougherty 2001).” Riordan is now faced with a massive amount of challenges that must be identified in order to develop a solution.

Issue Identification

Consequently, changes within the company have left Riordan to cope with a mass of challenges. Current changes have led to a decline in morale, work ethics, and employee retention. The consistent two-year regression means that the company has to focus on increasing sales and profit, aligning the staff, reducing turnover rates and increasing job satisfaction. The R & D department has the challenge of developing three new products to meet the following year.

The strategic choice at the function level is “how should total compensation help gain and sustain competitive advantage (Milkovich & Newman 2004)?” The company is faced with creating a new rewards system that includes compensation, salary, and benefits. The cost of implementing such a plan is also a concern for Riordan. The problem is the company is divided into three groups that do not agree or have different perspectives on rewards motivation, how to disburse incentives and what department should receive compensation. Some chief officers do not agree that a compensation system should be implemented, which has lead to an even bigger dilemma. Ultimately, while the challenges are seemingly overwhelming, there is a silver lining of opportunities available to Riordan.

Opportunity Identification

The opportunities that exist to Riordan Manufacturing is the ability to create 3 new products, increase sales, and introduce new appealing incentives for employees. “ Managing compensation strategically means fitting the compensation system to the business and environmental conditions (Milkovich & Newman 2004).” The CEO has allocated $50,000 to higher a consultant. This allows the company the opportunity to develop a solutions study survey that can help with job satisfaction, decrease turnover, and increase employee morale. This study will identify the underlying issues leading to decreased employee satisfaction and recommend potential mitigations for addressing the issues. Equally important, are the stakeholder’s needs and ethical dilemmas that have developed with the challenges and opportunities.

Stakeholder Perspectives/Ethical Dilemmas

Particularly, the stakeholders are Riordan employees, which are divided into three demographic groups. These groups are often referred to as the “Baby Boomers”. GenXers consists of the professional and some manufacturing staff. The GenY employees are the new hires that work in manufacturing, engineering and IT. Every group has a different opinion on the rewards system and motivation. The managers of the sales department feel as though their individual department bonuses could be at risk if the reward system is dependent on team effort rather than individual performance. Managers in other departments feel as though salaries need to be raised in order to maintain current employees, even with an incentive package. The Research and Development department agree that a new incentive program should be created, however the rewards should be for their department.

“Practices that link employees’ behaviors to each company’s specifics- knowledge of the specific work required, of specific products offered, and of specific customers served- are required for success (Milkovich & Newman 2004).” In completing an employee satisfaction audit, Human Capital Audit, found that employees do not feel valued, there is little opportunity for training and advancement, performance views do not always occur, and employees feel that managers show favoritism. Interviews done with key leaders are the company found a range of dilemmas. Kenneth Collins, Senior Vice President of R & D believes that key researchers will leave for higher pay and that incentives will not be enough to keep focus on long-term projects. Hugh McCauley, COO, that the issues facing Riordan are go beyond just compensation. Hugh feels as though the focus should be on improving jobs to make more appealing to employees. Charles Lacy, VP of sales, wants to revamp the sales system, but the customer-focused team’s process is slow moving and the sales force is unsure of what they are doing. However, he is concerned they do not have the time to implement successfully. Maria Trinh, Chief Information Officer, believes that IT is underpaid and that her best employees will leave. Michael Riordan, CEO, views Riordan as a company that takes care of its employees, but believes that they are not loyal anymore. Yvonne McMillan, Director of Human Resource, is concerned that the problem does not lie with employee morale, but the role of HR in the company. She deems the problems as a direct “result of HR being regulated to finance (University of Phoenix, 2006),” As a result; a definition of the problem statement can be developed that allows for multiple solutions.

Problem Definition

Riordan Manufacturing needs to develop a compensation package that can offer benefits and incentives that will strategically align the staff and raise employee morale. Thus, strategically aligning the staff to be future focused on the company’s goals of increasing sales and profit.

End-State Goals

In determining the best practices “the focus is a question not so much of what the best strategy is, but what the best strategy is, but of how best to implement the system (Milkovich & Newman 2004).” The end-state goals are for Riordan Manufacturing is completely overhaul and create a new rewards system that offers appealing compensation in salary, benefits, and other incentives. This new system will simultaneously help raise employee morale and increase employee retention. Riordan will have defined salary grades that will allow them to compete with other markets. Research and Development can focus on creating three new innovative products to increase sales.

Alternative Solutions and Benchmarking Validation

There are numerous solutions available for Riordan. Majority of them developed after the Human Capital Consultants did an employee audit to address concerns and obtain insight on what key leaders wanted and how they felt about the current situation facing Riordan. Current proposal set by Riordan Manufacturing after reviewing the results of the employee audit was to use a divided approach 1) conduct a salary survey for all positions. 2) Develop incentives for Sales and R & D based on corporate sales strategy. 3) Performance appraisals that ensure alignment between business strategy and employee rewards.

After researching other companies through generic benchmarks other alternate solutions were able to be developed like 4) Utilize survey report to develop specific strategies like evaluating employees-based on goals, multi-source assessments, competency models, and development plans. This solution is a performance management practices survey report by Perfromaworks, a consulting firm, which enabled M & A to establish key findings that allowed them to develop the best performance strategies for the company. Riordan could also use the tactic adopted by Interface, which was to 5) Develop a structured plan that allows for flexible pay and/or reward efforts for sales teams.

Analysis of Alternative Solutions

All the solutions potentially allow for the company goals to be met in terms of creating a new reward system. However, some solutions are more costly and will take longer to implements. Consequently making it difficult to reach the goals of increasing sales and profits. The alternative to conduct a salary survey for all positions, will determine place in market and salary grades. This will give Riordan the opportunity to compete with other companies salary offer, allowing them to sustain employees. Developing incentives for Sales and R & D based on corporate sales strategy. This solution addresses the concerns and needs of stakeholders and employees in these departments, who uncompensated for the success they have been making. The use of performance appraisals cans ensure alignment between business strategy and employee rewards offering as a balance between the two and addressing both the needs of the employees and the company’s ability to comply. This solution Utilizing survey reports to develop specific strategies like evaluating employees-based on goals, multi-source assessments, competency models, and development plans can help Riordan develop the best performance strategies suitable for its company and employees. The solution to, develop a structured plan that allows for flexible pay and/or reward efforts for sales teams, could help resolve the issues with the new customer team structure. The plan can reward all members of the team for their efforts. By respecting and rewarding employees, owners can help create an environment in which employees feel welcome and appreciated.

Narrowed List of Alternatives

Through a process of elimination, the alternatives for Riordan Manufacturing have been narrowed down to the following: 1)conduct a salary survey for all positions 4) Utilize survey report to develop specific strategies like evaluating employees-based on goals, multi-source assessments, competency models, and development plans 5) Develop a structured plan that allows for flexible pay and/or reward efforts for sales teams.

Risk Assessment and Mitigation

Risks are associated with any choice or decision that is chosen, big or small. If Riordan takes advantage of the survey report that Performaworks, Inc can provide they will be able to “gain competitive advantage by better executing their strategy through the alignment of employees’ goals with corporate goals (Performaworks, Inc 2003).” The risk associated with utilizing a survey report to develop specific strategies is the cost and time it will take HR to develop adequate assessments and models. This also risks neglecting of other projected due to more demand of HR, R & D, and the sales department. Developing a structured plan that allows for flexible pay and/or reward efforts for sales teams risks leaving some employees dissatisfied since the compensation would not be rewarded to every department. Employee morale may also continue to decline, causing some employees to leave the company. Conducting a salary survey for all positions risks employee morale remaining low; higher salary ranges can does not necessarily create loyal employees. The company has been in a steady decline the past two years and the solution risks products not being developed in time for implementation.

Mitigations for these risks are for Riordan to set a strict budget guideline and follow it accordingly. Riordan can periodically implement employee services to ensure that employees are satisfied and are aware of low morale and turnovers. Other mitigations are to improve communication between managers and employees and try to make incentive programs appealing to others. When implementing strategies make sure that they are focus on reaching the company’s goals successfully. The company can also allocate time accordingly, as to include mishaps that may occur and follow a timeline to ensure best results.

Optimal Solution

Faced with a multitude of challenges, the optimal solution for Riordan Manufacturing is to precede with the current proposal for the rewards system, to conduct a salary survey for all positions, but utilize survey report to develop specific strategies like evaluating employees-based on goals, multi-source assessments, competency models, and development plans. This solution can help determine incentives that are cost efficient and rewards that are equally divided or rotating.

Implementation Plan

Implementing the optimal solution is a process that with in three months as proposed by Human Capital Consulting as to allow time for products to be developed and compensation packages can disburse. The overall plan should take no longer than 6 months to develop due to the rapid decline in sales. Riordan will hire Human Capital Consulting to conduct the salary survey. The principal Barbara Masterson and her selected team will be responsible for this information. The plan will began on August 1, 2006 and needs to be successfully completed by November 1, 2006. The next step after this information is gathered is for HR to develop strategic questions and assessments that mirror company’s goals. Research and Development will be responsible for developing plans and competency models for use with the survey. Both departments need to be done no later than December 2006. HR should implement the survey and the results of the survey should be ready by January 2007. During the months of February to April the development of the compensation packages should be completed. The packages will be implemented accordingly by May 2007. From April to August R & D will create new innovative products and have them ready for implementation by August 2007. The sales department is then responsible for introducing these new products on the market.

Gap Analysis and Estimated Implementation Costs—Evaluation of Results

The cost of implementing a combination plan was beneficial for Riordan. The cost of hiring a consulting firm to gather the salary survey information was 25,000 dollars; one of the less expensive options suggested by the consulting firm. This choice allowed Riordan to spend money on the second portion of the solution, which was an internal survey. This solution provided the insight that Riordan needed to develop appropriate incentives for employees.

The plan was implemented without a hitch and as a result the company was able to devote more resources, time and money into developing products to help the company increase its two-year sale decline. With in three years, Riordan became on of the top manufacturing company in the industry for its products. Not only did the company increase in sales, they also became one of the top companies to work for, offering exceptional benefits and compensation to employees.

Conclusion

In summation, Riordan Manufacturing was faced with difficult challenges that needed to be addressed in order to become the best in the industry. To do so the company had to face its challenges such as a decline in morale, work ethics, and employee retention, a consistent two-year regression; declining sales and profit, aligning the staff, reducing turnover rates and increasing job satisfaction. By defining the opportunities available to Riordan a list of alternative solutions were develop that were narrowed down to one optimal solution.

The implementation of the solution suggestion, set by the consulting firm, to do a salary survey combine with an internal survey proved to be the best practice for Riordan Manufacturing. This solution was cost efficient and allowed for the goals set by the company to be met as well as the opportunities.

References

Business Editors/High-Tech Writers. (2003, January), Performaworks Survey of Performance Management Practices at Large Companies Shows Pressing Need for Solutions to Align Employee Goals to Corporate Strategy. Journal of the Business Wire. Retrieved April 30, 2006, from http://www.findarticles.com/Last Name, First Initial. Middle Initial (if there is one). (year). Name of article in sentence case: If there is a subtitle, it should also be in sentence case. Name of Journal in Title Case, volume(issue), first page-last page. Retrieved Month Day, Year, from name of database.

Dreher & Dougherty. (2001). Human Resource Strategy: A behavioral perspective for the general manager. [University of Phoenix Custom Edition e-text]. New York: McGraw Hill. Retrieved May 10, 2006, from University of Phoenix, rEsource. MBA 530- Human Capital Development Course Web site.

Milkovich & Newman. (2004). Compensation. (8th ed.). [University of Phoenix Custom Edition e-text]. New York: McGraw Hill. Retrieved May 10, 2006, from University of Phoenix, rEsource. MBA 530- Human Capital Development Course Web site.

University of Phoenix. (2006). Motivating and Compensating Employees [Computer Software]. Retrieved April 29, 2006, from University of Phoenix, rEsource, Simulation, MBA 530- Human Capital Development Course Web site.

University of Phoenix. (2006). Week four overview. Retrieved April 22, 2006, from University of Phoenix, Week Two, rEsource. MBA 530- Human Capital Development Course Web site.



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